This post is part of the Environmental Law Review Syndicate, a multi-school online forum run by student editors from the nation’s leading environmental law reviews.

The Rails-to-Trails Act (“Trails Act”) provides localities and nonprofits with a useful tool for transforming dormant rail rights-of-way (“ROWs”) into recreational trails. 16 USC § 1247(d).[1] The Act streamlines the legal complexity of trail conversion by providing a clear and systemic framework for the railroad to transfer ownership of the corridor to a third party sponsor organization (known as the “interim trail manager”). Only a ROW in the interstate, common carrier rail network (hereinafter, a “common carrier line”) [2] is eligible for trail conversion under the procedures of the Trails Act. 16 USC § 1247(d).[3] All railbanked ROWs are subject to reactivation for rail service,[4] so potential trail sponsors should consider this risk when drafting the railbanking agreement and investing in the trail corridor. Finally, railbanking is a voluntary transaction between the railroad and the trail manager—nothing in the statute obligates the railroad to negotiate or agree to railbanking.[5] However, because the Act allows railroads to shed property tax liability without foreclosing the possibility of future rail service along the corridor, it is often an attractive proposition for inactive common carrier lines.

When analyzing a potential Rails-to-Trails conversion, the potential trail sponsor should ask the following questions:

(1) Is the rail corridor in question a part of the interstate, common carrier rail network? If so, STB jurisdiction and federal preemption still govern, even if that ROW is not in active freight or passenger service. Such common carrier lines are ideal for trail conversions. The Trails Act provides a clear procedure for conversion, and federal law preempts potentially problematic adverse property claims.[6] Trail managers should ensure that this federal jurisdiction has not been ceded through a consummated abandonment prior to railbanking.[7]

(2) If state law governs, does the interim trail use terminate the railroad’s original property interest? If so, those interests conveyed to the trail manager may be subject to quiet title litigation by residual interest holders.

(3) Finally, was the original ROW assembled through a federal land grant? If so, certain federal laws may apply.[8]

The Interstate Commerce Act of 1887, as amended (“ICA”), vests in the Surface Transportation Board (“STB”) exclusive jurisdiction over rail transportation in the interstate commerce. 49 USC § 10501.[10] As a result, many state law claims (primarily property, tort, and contract claims) brought against a common carrier railroad and its subject property are preempted by STB.[11] This exclusive jurisdiction only applies to railroad lines in the interstate commerce (“common carrier lines”), certified by the STB under 49 USC § 10901, et. seq.[12] Once authorized as common carrier railroad lines, STB jurisdiction and preemption applies to that ROW, even if the railroad ceases operation along that line or transfers it to another party.[13] The only way to remove a common carrier line from the interstate network is through “abandonment authority” pursuant to either 49 USC § 10903 or 49 CFR pt. 1152.50. Once abandoned, state law controls, and myriad state property issues may arise.[14]

Railbanking sets aside inactive railroad ROWs for interim use as parks and recreational trails, preserving contiguous rail corridors for future freight service. Trails Act, 16 USC § 1247(d). Congress passed the Trails Act in response to a rapid increase in railroad abandonments in the late 20th century.[15] While all common carrier railroads operating in the interstate commerce fall under the exclusive jurisdiction of the federal government,[16] deregulation of the transportation industry throughout the 1970s and 1980s gave railroads increased flexibility to discontinue service on redundant and unprofitable railroad lines. Ferster, at 4.[17] Because abandonment cedes federal preemption over rail ROWs, state property law took hold along large stretches of these corridors. Id. Originally, many rail ROWs were assembled through contingent-use easements or reversionary (defeasible) fee interests—residual interests that are often triggered once railroad use ends on the line.[18] Thus, once abandonment ceded federal preemption over these residual state-law property claims, many rail corridors were irreversibly severed, to the detriment of the contiguous, interstate rail network. The Trails Act prevents such severance by maintaining federal preemption over the ROW during interim trail use.

The Trails Act allows railroads to transfer dormant rail ROWs to local governments or qualified non-profit organizations, known as “interim trail managers.” Ferster, at 5. The trail manager serves as a trustee for the ROW, assuming all legal and financial liability for the property. 16 USC § 1247(d). When a railroad initiates an abandonment proceeding, interested potential trail managers can submit a railbanking request to the STB.[19] All railbanking agreements are voluntary—if the parties cannot reach an agreement, the railroad may choose to consummate abandonment of the rail line.[20]However, railroads often enter into railbanking agreements to shed tax liabilities without foreclosing the possibility of future freight service.[21] Railroads may transfer ROWs to trail managers by sale, donation, or lease. Ferster, at 5.

II. Federal jurisdiction over rail ROWs in the interstate commerce.

Federally regulated, common carrier rail lines are ideal for trail conversion under the Trails Act. As discussed above, the STB regulates common carrier railroad lines in the interstate commerce, preempting many state property law claims. ICA, 49 USC § 10901.[22] Federal preemption provides a clear procedure for trail conversion under 16 USC § 1247(d), ensuring that reversionary property interests do not cloud the transaction. This procedure and potential legal issues arising under the Trails Act, the ICA, and accompanying regulations are discussed below.

If a railroad moves for abandonment,[24] a prospective trail manager can request a railbanking order from the STB. 49 CFR pt. 1152.29. The trail manager must reach an agreement with the railroad for the transfer of the line before the railroad abandons that line.[25] Until a carrier has consummated abandonment of a common carrier line, disposition of that ROW remains under the sole jurisdiction of the STB.[26] The STB’s role in the railbanking process is largely ministerial—it will issue a railbanking order if (1) the parties agree,[27] and (2) jurisdiction is proper.[28] Procedural requirements for railbanking are enumerated in 49 CFR pt. 1152.29.

The trail manager requests a railbanking order from the STB within 45 days of an abandonment filing, or within 10 days of a 49 CFR pt. 1152.50 Notice of Exemption. Late filed requests may be considered by the STB if the railroad has not consummated abandonment.

The trail manager simultaneously serves the railroad with a copy of that railbanking request.

If the railroad agrees to negotiate a railbanking agreement, that railroad must respond within 60 days of its application for abandonment authority. The STB then issues a Notice or Certificate of Interim Trail Use (“NITU or CITU”) in lieu of abandonment authorization or notice. The trail manager and railroad have 180 days to negotiate an agreement for transfer of the ROW.[29]

The railbanking agreement memorializes the legal from of conveyance. Prudent trail managers should stipulate a contractual compensation rights within this document in case the rail line is reactivated, in order to protect investments in the trail.[30]

Once the parties notify STB that they have reached an agreement, the ROW is added to the national railbank. That corridor is preserved for trail use until that rail line reactivated or the trail manager fails to meet its obligations under 16 USC § 1247(d).

49 CFR pt. 1152.29. Once railbanked, the ROW remains under federal jurisdiction. 49 USC § 1247(d). However, from the railroad’s perspective, the line is essentially abandoned. The only difference is that the railroad retains the right to reactivate the line.

In Virginia, potential trail managers should coordinate and submit railbanking requests through the Virginia Department of Conservation and Recreation (DCR).[31]

b. Reactivation

Railbanked corridors may be reactivated and returned to railroad service at the request of the abandoning rail carrier.[32] If a railroad demonstrates that common carrier rail service is consistent with “the pubic convenience and necessity,” pursuant to 49 USC § 11901, the STB must vacate any existing Certificate of Interim Trail Use for that corridor. 49 CFR pt. 1152.29(c)(3).[33] This is a relatively rare occurrence.[34] However, trail managers should be aware that railbanked trails are subject to reactivation, regardless of past investments or impacts to the existing trail.

This reactivation right is not exclusive to the abandoning carrier. Third parties, including the trail manager, may petition the STB for authority to acquire the abandoning railroad’s residual common carrier rights and obligations over the railbanked corridor.[35] Further, any other “bona fide petitioner” may move to reactivate a railbanked line. Ballard Terminal R.R. Co, FD 35731, at 5.[36] However, the disposition of the railbanked corridor is subject to the discretion of the STB. Id. The STB will consider the costs of restoring service, including the cost of refurbishing tracks along the ROW and obtaining the necessary easements from the ROW owner. See, e.g., id.[37] Therefore, trail managers may be able to indirectly prevent reactivation by acquiring as much of the underlying interest in the ROW as possible (and thereby increasing the costs of reactivation).

c. Abandonment of a common carrier rail line

The Trails Act codifies federal preemption for properly railbanked ROWs, even after the railroad legally abandons a line. 16 USC § 1247(d).[38] However, if a railroad consummates abandonment authority prior to railbanking, state law controls. Abandoned ROWs may be subject to quiet title litigation or other state law claims, discussed below in Part III.

In order to abandon a ROW, the operating railroad must either petition the STB for a Certificate of Convenience and Necessity pursuant to 49 USC § 10903,[39] or provide the STB with a Notice of Exemption that meets the requirements of 49 CFR pt. 1152.50 (essentially, a provision for bankrupt or inactive railroads). Once the STB issues abandonment authority, the railroad must take steps to consummate that authority, judged by that railroad’s intent. Birt, 90 F.3d, 585.[40] Abandonment vacates federal jurisdiction and preemption; as a result, state property law governs title disputes along that ROW. Preseault v. ICC, 494 U.S. 1, 6 n.3 (1990).[41]

Toxic contamination from legacy railroad use can present other environmental issues for trail managers.[43] Soils removed during construction may be subject to state and federal hazardous waste disposal requirements.[44] Trail managers should shield themselves from legacy liability by conducting the appropriate environmental review of the property prior to acquisition and negotiating apportionment of any cleanup costs or potential liability in the railbanking agreement. For a survey of environmental issues and remediation strategies for rail-trails, see generally Trail Development Assistance Response Team, Understanding Environmental Contaminants: Lessons Learned and Guidance to Keep Your Rail-Trail Project on Track, Rails-to-Trails Conservancy (Sept 24, 2004).[45]

Virginia DCR recommends that potential trail managers in Virginia should conduct a primary environmental assessment of the ROW, described in VDCR, Greenways and Trails Toolbox, Ch. 4-7, Operations & Management. Trail managers should also ensure to abide by construction Best Management Practices to prevent soil runoff, whether or not hazardous substances are present. Id., at 4-32—41.

e. General liability for the trail manager during trail use

One of the requirements of the Rails-to-Trails Act is that the trail manager assumes all legal and financial liability for the ROW. 16 USC § 1247(d). The trail manager must satisfy all tax obligations, otherwise the STB may invalidate the CITU / NITU.[46]

Once a ROW has been transferred to the trail manager and converted to trail use, managers may be liable under general tort liability arising from maintenance and use of that facility, according to state law. Rail trails are no different than any other public facility. Whether the trail manager is a government entity or NGO and the laws of the particular state determine if that entity is shielded from tort liability by the doctrine of sovereign immunity.[47] Finally, NGO trail managers should obtain insurance to mitigate any liability risks. For a general survey of potential liability issues involving trails, see generally Hugh Morris, Rail-Trails and Liability: A Primer on Trail-Related Liability Issues and Risk Management Techniques, Rails-to-Trails Conservancy (Sept. 2000), available athttp://www.railstotrails.org/resourcehandler.ashx?id=3501.

f. “Tucker takings” for ROWs under federal jurisdiction

The Rails-to-Trails Act preempts any challenges to the ownership or use of properly railbanked ROWs, eliminating the specter of adverse claims. 16 USC § 1247(d).[48] Because federal law controls, railbanking does not terminate easements or trigger any defeasible interests. However, plaintiffs may be able to obtain just compensation from the federal government under a takings theory, pursuant to the Tucker Act. 28 USC § 1491(a)(1).[49] Proper jurisdiction for such claims is Federal Clams Court. Id. However, plaintiffs seeking less than $10,000 can file in federal district court. 28 USC § 1346(a)(2). An adverse Tucker judgment does not implicate either the trail manager or the former railroad. The federal government is solely responsible for paying just compensation, and no equitable remedy is available to the plaintiff. See Preseault v. US, 100 F.3d 1525 (Fed. Cir. 1996).

III. State jurisdiction over ROWs outside of the interstate commerce, including former federal lines formally abandoned by the railroads.

If a particular rail line is governed by state law, various state property laws may apply and will determine whether that line can be converted to trail use. Rail lines that were never a part of the interstate commerce, such as private or excepted track, are governed by state property law.[50] Further, once a carrier has consummated abandonment of a railroad line in the interstate commerce, federal preemption is vacated, and state property law again controls.[51]

Conversion to trail use might invalidate the conditions of the original ROW grant to the railroad. Whether a conversion terminates the property interests turns upon the instrument, method of conveyance, and applicable state law. Ferster, at 7. Railroads usually acquired their original interests through one of three methods:[52] (1) private grants from willing property owners, usually for valuable consideration; (2) condemnation proceedings; and (3) prescription.[53]Id., at 7-8.

Private grants of property interest often turn upon language, instruments, and circumstances of conveyance and require case-by-case analysis.[54] For instance, many original landowners granted carriers ROW easements “for railroad use.” Other landowners conveyed “defeasible fees” to railroads, with a reversionary interest upon either a change of use or ownership. The practical implication either conveyance is typically the same: a change in ownership or a termination of railroad use will either extinguish a contingent easement or trigger a reversionary interest, allowing the fee simple property owner to take free and clear of any encumbrances. Id.[55] This concept, known as abandonment of use, flows from state property law and must not be conflated with the STB abandonment procedure described in Part II.a. above.

Neighboring property owners may also have acquired a property interest in the railroad ROW through adverse possession or prescription. However, many state adverse possession statutes explicitly bar railroad ROWs from adverse possession, and leftover ties, tracks, and signage often place potential adverse possessors on notice of the railroad’s ownership interest.

Where ownership questions are left open to state law, trail managers should attempt to settle any disputes to the ownership by obtaining quitclaim deeds or initiating quiet title actions before undertaking any improvements. Otherwise, trail managers could be subject to takings claim, the outcome of which may not only jeopardize improvement investments, but also segment the proposed trail ROW beyond effective use.

Conclusion

The Rails-to-Trails Act provides a clear procedural pathway for governments and non-profits to repurpose inactive rail corridors for public use. However, interested parties should ensure that the rail corridor is a common carrier railroad line under STB jurisdiction before attempting to proceed with a trail conversion project under the Trails Act. Attempts to acquire corridors governed by state law may open the trail sponsor to costly and time consuming quiet title litigation. Even when a corridor is properly railbanked pursuant to the Trails Act, the trail sponsor should also be aware of the possibility of reactivation and liabilities arising from various federal and state environmental regulations. However, if undertaken properly, trail conversions can facilitate adaptive reuse of these corridors as inspiring public spaces.

[12] Contrast common carrier lines with private track (used for the owner’s private transportation purposes, rather than held out for common carriage) and excepted track (“spur, industrial, team, switching, or side tracks”), which are typically governed by state law. See 49 USC § 10906 Hanson Natural Resources—Non-Common Carrier Status—Pet. for Declaratory Order, FD 32248 (ICC served Dec. 5, 1994).

[14] These issues are discussed infra, at Part III. Some of the most common issues include reversionary property interests revived by the termination of federal preemption. Many railroad ROWs were conveyed via easement or conditional fees—these reversionary interests may be triggered by abandonment.

[15] “[I]n furtherance of the national policy to preserve established railroad rights-of-way for future reactivation of rail service [and] to protect rail transportation corridors. . . interim use [for trails] shall not be treated . . . as an abandonment of the use of such rights-of-way for railroad purposes.” 16 USC § 1247(d).

[17] Many railroads elected to abandon extensive segments of the national rail network in order to cut costs and redundancy. Id. Deregulation increased efficiency, allowing railroads to compete with other modes of freight transportation. However, abandoned rail lines irreparably segmented much of the national rail network.

[23]See Birt v. STB, 90 F.3d 580, 583 (D.C. Cir. 1996) (“Because this transfer is deemed by statute not to constitute an abandonment of the line, the reversionary interests of adjoining landowners do not vest, even though the railroad ceases service and takes up the tracks. The rail line instead retains the right to reassert control over the easement at some point in the future if it decides to revive rail service.”).

Residual property interests triggered by abandonment may make either trail or future rail use unnecessarily complicated, expensive, or even impossible. See supra, note 20 (benefits of railbanking); infra Part III (complications arising from state law claims).

[28]Rail Abandonment: Supplemental Trails Act Procedures, 4 ICC 2d 152, 156-58 (1987). The test for STB jurisdiction is whether the carrier retains the right to reactivate service on that line. Buffalo Twp. v. Jones, 813 A.2d 659, 665 (Pa 2002), cert denied, 124 S. Ct. 143 (2003) (“Mere nonuse by the railroad does not amount to abandonment.”). This reactivation right is voided by either (1) consummated abandonment, as described infra, at notes 37 and 38, and accompanying text, or (2) severance of the rail corridor, such that it no longer connects to the interstate rail system. RLTD Ry. Corp. v. STB, 166 F.3d 808, 813-14 (6th Cir. 1999) (STB properly determined a line severed from the interstate network because a large segment had been paved over.).

[29] The parties may continue to negotiate after 180 days, but the carrier has the authority to abandon the rail line. 49 CFR 1152.29 (c)(1).

[30] As discussed below, the STB must vacate railbanking orders upon an “appropriate and necessary” request to reactive service. Infra, Part II.b. Compensation for any improvements depends on the terms stipulated in the contract. Georgia Great S.—Exemption, infra, note 33.

[32]SeeNorfolk & W. Ry.—Abandonment Between St. Marys & Minister in Auglaize Cnty., Ohio, 9 ICC 2d 1015 (1993) (explaining that the abandoning carrier retains both the residual right and the common carrier obligation to reactivate service upon reasonable request) (emphasis added).

[33] The STB will vacate a CITU without considering the trail manager’s investments along the corridor. Georgia Great S. Div., S. Carolina Central R.R. Co.—Abandonment Exemption—between Albany and Dawson in Terrell, Lee, and Dougherty counties, Georgia, AB 389 (Sub-no. I 1X) (STB served May 16, 2003). Any compensation for improvements must be stipulated in the railbanking agreement between the parties. Id.

[35]See, e.g., King Cnty., Wash—Acquisition Exemption—BNSF Ry., FD 35148 (STB served Sept. 18, 2009). In King County, the STB granted the locality trail manager authority to acquire BNSF’s residual common carrier obligation to build a transit line, subject to the terms of the railbanking agreement. Id.

Note that the right to reactivate service includes the common carrier obligation to provide rail service upon reasonable request. 49 USC § 11101(a).

[37] In Ballard Terminal, a proceeding related to the transaction in King County, supra note 34, a third party railroad petitioned the STB for authorization to reactivate a railbanked ROW. Id. In the railbanking agreement, the trail manager acquired both ownership of the corridor and the residual common carrier obligation. Id. Afterward, the trail manager transferred the common carrier obligation to the Port of Seattle. Id., at 3. The Port conveyed a transportation easement to the local mass transit authority over a portion of the ROW, conveyed a small portion of the ROW to a neighboring locality, and transferred the remaining common carrier obligation back to the trail manager. Id.

The STB determined that Ballard did not demonstrate that sufficient demand existed to justify reactivating freight service, and that Ballard was not in a financial position to provide rail service, even if such demand did exist. Id. In making this determination, the STB considered the fair compensation to the corridor owner (primarily the trail manager) for the use of that property and replacing the removed tracks. Id., at 6.

[38] “[I]nterim [trail] use shall not be treated, for purposes of any law or rule of law, as an abandonment of the use of such rights-of-way for railroad purposes.” Id.

[39] Implemented at 49 CFR pt. 1152. Convenience and Necessity is a legal determination that the line is not necessary to the interstate rail network no, nor will it be in the future. See pt. 1152.1.

[40] STB abandonment authorization does not automatically consummate that abandonment. Id. (no abandonment where the railroad continues to negotiate with a prospective trail manager); Buffalo Twp., 813 A.2d 665 (“[T]he filing of the [abandonment] certificate must be coupled with external acts in furtherance of abandonment.”).

[41] “Once a carrier ‘abandons’ a rail line pursuant to authority granted by the Interstate Commerce Commission [now, the STB], the line is no longer part of the national transportation system, and . . . as a general proposition [STB] jurisdiction terminates.” Id.

[44] Removal of waste may trigger state hazardous materials regulations, or federal laws such as the Resource Conservation and Reclamation Act (RCRA), Comprehensive Environmental Response Compensation Liability Act (CERCLA), Federal Water Pollution Control Act (FWPCA or CWA), or Clean Air Act (CAA). Id., at 9. Rail trails are no different than any other brownfield construction project in this regard.

[46]SeeJost v. STB, 194 F.3d 79, 88-89 (D.C. Cir. 1999) (The decision to issue or revoke a NITU lies solely with STB and is judged under the deferential “arbitrary and capricious” standard.).

[47] In Virginia, sovereign immunity shields government actors from certain tort claims. Fox v. Deese, 234 Va. 412, 423-24 (1987) (Intentional torts and torts outside the scope of government functions are not covered by sovereign immunity.). Thus, municipalities or other government offices may be better positioned than other non-profits to undertake trail management. For a full discussion on best practices for potential trail managers (either municipalities or NGOs), see VDCR, Greenways and Trails Toolbox, Ch. 4, Operations & Management.

[48] The Act expressly prohibits any conflicting state law by ensuring that railbanked corridors “shall not be treated for purposes of any law or rule of law, as an abandonment of the use of such rights-of-ways for railroad purposes.” Id. This provision is predicated on federal preemption of state property law. Grantwood Village v. Missouri Pacific R.R. Co., 95 F.3d 654 (8th Cir. 1996), cert. denied, 519 U.S. 1149 (1997) (transferring that state property claim to federal court and dismissing it for lack of jurisdiction).

[52] A fourth method, federal land grants, was used to acquire ROWs primarily in the Western U.S. ROWs conveyed through federal land grants implicate unique legal issues outside the scope of the memorandum.

[53] A prescriptive easement is an interest in a particular use acquired through adverse possession. The elements typically mirror those for standard adverse possession, requiring open, adverse use over the parcel for a set statutory period. See, e.g., Rives v. Gooch, 157 Va. 661, 663 (1932) (In Virginia, the elements are: (1) adverse, exclusive use of the easement; (2) under claim of right; (3) continuous and uninterrupted for at least 20 years; and (4) with the knowledge and acquiescence of the property owner.

[54]See American Law Institute, § 8.3 Availability and Selection of Remedies for Enforcement of a Servitude, Restatement (Third) of Property (Servitudes) § 8.3 (2000).

[55] Note that in some states, trail use falls within the scope of a railroad easement. Ferster, at 7.